Buying your first car in Singapore: Costs, COE and what else to consider

Buying a car here isn’t just about picking a model you like. With the uniquely Singaporean Certificate of Entitlement (COE), as well as car loans and road tax, it can feel like a lot to take in.

For first-timers, the whole process can seem incredibly intimidating. But it is also navigable, if you know what to look out for. Here, we break down the steps to making your first car decision – without getting steamrolled by the process.

How to figure out your budget and financing for a car

Cars are expensive in Singapore, we all know that. But if you look past the shocking six-figure sticker price, a car can still be within reach if you manage your finances well.

You can take a loan to pay for your car, which then breaks the payment down into more easily digestible monthly instalments.

However, do take note: Monetary Authority of Singapore (MAS) financing rules dictate that the maximum quantum for car loans is either 60 or 70 per cent of the car’s selling price, depending on the car’s Open Market Value (OMV). That means that the remainder must be paid in cash. The maximum loan tenure is also capped at seven years.

Therefore, instead of seeing the car’s price as one huge insurmountable figure, think about how much ready cash you have on hand, and how much you can afford monthly. This gives you an idea of your budget, and will then point you towards what kinds of cars are accessible to you.

Websites like Sgcarmart offer handy calculators to help you work out how much exactly you must pay for the car, based on your down payment, loan tenure and prevailing interest rates. It certainly takes a lot of the headache out of doing the sums, so do make use of such available tools.

Beyond the loan instalments, do factor in other expenses such as road tax and insurance. These are generally paid annually instead of monthly, but it’s still worth taking them into account in your financial calculations.

Should you buy a new or second-hand car?

A brand-new car would require a higher initial financial outlay, but in exchange, you do get greater peace of mind, as a brand new product is less likely to give problems. New cars also come with warranty coverage for the first few years of ownership, as well as perks like free servicing packages from the dealer, which offer even more assurance.

However, if a new car is out of reach, then you might have to consider going second-hand. While they might be more affordable, they do come with risks. A second-hand car’s condition is obviously not as comparable to a new one, and warranty coverage might be limited. Make sure to set aside additional budget to account for servicing and repairs if required.

Ultimately, it is all about striking the right balance based on your available resources, but it’s important to keep an open mind.

How to decide which car model is right for you

Now that you’ve got your budget sorted, how do you decide what car to go for? It really depends on your needs and wants. Ask yourself: What will I be using the car for?

If you’re going to be mostly a solo driver, then a small hatchback would be an ideal starter car, as its compact size makes it easier to manoeuvre and park.

However, if you need to ferry your family or kids around, then perhaps a sedan or a Sport Utility Vehicle (SUV) might be more suitable. There are also seven-seater multi-purpose vehicles (MPVs) and SUVs if you need more seats for extended family, but these tend to be fairly big cars to drive.

If you carry large items regularly, look for something with a large boot space. These are usually cars like station wagons or a larger-sized SUV, and they usually have lots of room to accommodate things like furniture or even full-sized bicycles.

Aside from the size, it would also be good to have an idea of what features you would like to have in your car, so that you can further streamline your choices.

Would you prefer to have convenience features that make your life easier, such as automatic parking assist, or safety systems like blind spot monitoring and collision alerts to keep you safe? Perhaps you might want to splurge a little on fancy stuff like a high-end sound system or even massage seats? It’s worth doing some research to see what’s available out there.

Is an electric vehicle (EV) right for you?

Electric vehicles (EVs) are all the rage these days, thanks to our government’s push towards the adoption of cleaner energy vehicles. But would an EV be right for you, given how different they are from petrol-powered cars?

First, think about your driving patterns. Most new EVs have a driving range of around 400km on a full battery charge. If you’re mostly just commuting between work and home, that should be more than enough to last you a week or more before the battery runs out.

At the same time, do take note if the places you visit regularly offer EV charging facilities.

It would be ideal if there are chargers available at the carparks of your home or workplace, but you can also make use of public chargers at the shopping malls you frequent.

EV driving does require a bit of planning, but with the rapid expansion of the charging network in Singapore now, finding an available charger is becoming less of an issue these days.

The benefits of EV ownership are lower running costs, as electricity costs less than petrol, and EVs generally need less maintenance than a regular car. However, they do incur slighter higher road tax than an equivalent petrol car, so do your sums accordingly.

Where to buy a car in Singapore

If you’re buying a new car, it is highly recommended to buy from the brand’s authorised dealer, as they have full backing from the car manufacturer. This means that they can offer manufacturer-guaranteed warranties and after sales service support, giving you greater assurance for your purchase.

If you’re buying a second-hand car, try to buy from a trusted used car dealer. You can look for dealers with a Casetrust-SVTA (Singapore Vehicle Traders Association) accreditation, which are certified to have upheld good business practices and standards.

Once you’ve settled on your desired car, or shortlist of cars, it is important to view it up close in person and take it out for a test drive. Sit in the driver’s seat and see if you can find a comfortable position. Explore all the important controls to check if they are easy to use and within reach from your ideal seating position. If you’re using the car to drive your family around, try to bring them along too. After all, they will be your passengers, so it is important that they are comfortable.

On the test drive, check for things like whether it is easy to see out of, and that there are no large blind spots. Is the ride comfortable and quiet, or does the car feel rough and noisy? In the carpark, see if the car is easy to steer and manoeuvre, and whether you will have any problems with parking it.

If you’re buying a second-hand car, there are more things to take note of. Take a thorough visual inspection to ensure that there is no major damage. And likewise, on the test drive, try to detect if there are any unusual noises or vibrations, which could indicate a potential issue. Ideally, bring along someone who is knowledgeable about cars to help you keep an eye out for any possible problems.

What to look out for when finalising your car purchase

Congratulations, you are now the proud owner of a car. Before you drive home with your new ride, give the car a final visual inspection to ensure that everything is in proper condition, and confirm with the seller that all the necessary paperwork has been settled. Stay safe on the roads, and happy driving!